The United Auto Workers strike against the Detroit-Three auto makers entered a new phase Wednesday. It means more uncertainty for investors. It also means the auto makers and the union are still far apart on a couple of key issues.
UAW workers Tuesday evening walked out at Ford’s Kentucky Truck Plant. It’s a move designed to inflict serious financial pain on the auto maker.
Ford stock was down 2.4% in premarket trading Thursday, while
S&P 500
and
Dow Jones Industrial Average
futures both rose 0.4%.
With nearly 9,000 workers, Kentucky is Ford’s largest plant in the world. F-series super duty is built there. That’s an important profit generator for Ford’s commercial business, Ford Pro. The Lincoln Navigator and Ford Expedition are built there, too. Overall, Kentucky generates about $25 billion in sales annually. Ford is expected to generate $173 billion in sales in 2023, according to FactSet.
Now about 17,000 Ford workers are on strike, bringing the total at all three auto makers to about 33,000. Total UAW employment at the Detroit-Three is about 145,000 workers.
Ford says it has the best economic offer of the three auto makers on the table. It was unwilling to make a new offer Wednesday.
“Well you’ve just lost Kentucky,” said UAW President Shawn Fain, according to the company.
“Ford made an outstanding offer that would make a meaningful positive difference in the quality of life for our 57,000 UAW-represented workers, who are already among the best compensated hourly manufacturing workers anywhere in the world,” reads part of an emailed statement. “In addition to our offer on pay and benefits, Ford has been bargaining in good faith this week on joint venture battery plants, which are slated to begin production in the coming years.”
The UAW wants battery employees to be treated just like assembly line workers. Ford appears to be unwilling to meet all of UAW’s demands.
The strike began on Sept. 15. It was expanded on Sept. 22 and Sept 29. This walkout represents the third expansion.
The strike has weighed on stocks. Coming into Thursday’s trading, Ford and
GM
stocks were both down about 20% over the past three months while the
S&P 500
was down about 1%.
Stellantis
shares are up about 12%, but Stellantis is a more global company and shares are cheaper than the other two. Stellantis stock trades for less than 4 times 2024 earnings estimates. Ford and GM shares trade for less than 7 times and less than 5 times, respectively.
Write to Al Root at [email protected]
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